By Aimee Duffy | September 17, 2012
The Motley Fool has helped ordinary people become better investors for nearly two decades. This month, we're reaching out to millions of investors to help guide them in their quest toward financial knowledge and independence.
Along those lines, I'm planning to look at a few of the most popular midstream stocks in the market today. The midstream industry is growing at a rapid clip, and there are many potential investments to choose from. Today I'd like to focus on Enterprise Products Partners (NYSE - EPD).
Headquartered in Houston, Enterprise operates almost 51,000 miles of pipelines, not to mention processing plants, fractionation facilities, and import/export terminals. It's a master limited partnership sporting a 4.8% yield and an annual distribution of $2.54. Over the past five years, the partnership's share price has increased nearly 80%.
MLPs are common in the midstream industry. As the pipelines and processing centers generate cash flow, the partnership structure allows profit to flow straight through to unitholders untaxed as distributions. Unitholders are then responsible for paying taxes on their share of the MLP's income. It means a little extra paperwork come tax time, and again when you decide to sell the MLP, but is often times quite worth it.
In addition to its generous yield and rapidly increasing share price, Enterprise is growing its asset base at quite a clip. It's bringing $3.2 billion in infrastructure online by the end of 2012. Much of that development is happening in the Eagle Ford play in Texas, one of the hottest onshore production plays in the U.S. right now. All told, Enterprise currently has more than $7.5 billion in growth projects under construction. And, unlike other midstream heavyweights TransCanada (NYSe - TRP), Enbridge (NYSE - ENB), and Kinder Morgan (NYSE - KMI), Enterprise isn't fighting environmental, civil, and government opposition to a major pipeline project right now.
Enterprise Products Partners has a solid history of growth that shows no signs of stopping now. The partnership increased its asset base from $715 million at its IPO in 1998 to $34 billion today. To learn more about the past, present, and future of Enterprise, use this link to the partnership's investor page.
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